Q&A with Eric Dobson of Sheltowee Venture Fund II, LP

The heartland lacks the density of investors and entrepreneurs, but has a staggering amount of medtech, cleantech, deep tech, hard tech, advanced manufacturing, advanced materials, etc. because of the prevalence of research universities, research laboratories, and accelerator programs designed to find “diamonds in the rough.” The challenge is investors must be willing to invest not just money, but time actively investing in these entrepreneurs to turn them from inventors to successful entrepreneurs. These are highly intelligent people doing incredible things, but often lack soft skills and understanding of how to speak to investor to convey the true value of their innovations. The good news is most of them are operating in B2B models where technical sales rule and their acquisitions will be based on the value of their technology and customer base. We were contracted by Oak Ridge National Laboratory to create an investor readiness program, which is, in reality a business readiness program, for their accelerator/incubator cohorts. This creates a proprietary deal flow pipeline for us to access cutting edge technology that will impact the world around you. This is a repeatable, scalable model for our fund. We create “dwell” time with these companies to understand their true potential and how we can most directly help them be dramatically successful. We are involved before we invest, spend time with the teams and technologies to vet the opportunities thoroughly, and make small investments all to reach the point that the Fund can invest in a derisked fashion. Our track record shows this.

The short answer is uncorrelated deal flow and outsized returns. These are deals that the costs will never see until its too late. We identify highly valuable and impactful companies early, work with them to validate the opportunity, make small investments in them to assess their true leadership potential, actively invest to accelerate their respective business models, and then invest from the Fund to ignite them and solidify the value of the entire chain. We have enjoyed six exits between 2 and 6 x in the last four years in medical devices, robotics, software as a service, and a consumer product. We have seven exits pending in medical devices, software as a service, AI, advanced materials, advances manufacturing, and life sciences. Five of the seven a planning either IPO or SPAC the next 36 months. We have built a machine for processing a robust, full deal flow pipeline in the heartland. We cherry-pick the process from start to finish. We believe we will beat the industry averages significantly and that we already have some “unicorns” in the stable.

That is a great question. The short answer is we are likely viewed as such, but all three GP’s have 20+ years of entrepreneurial and investment experience. We have all take companies from start to exit. We have all lead investments that returned venture-sized capital. We each have direct fund management experience. The challenge is most of it was consider “angel” investing. The reality is we have taken angel invest to a professional level. We know how to source, vet, invest, curate, and exit deals. We have a demonstrable track record of success. Everyone talks about SPV’s these days. Essentially, that is what we have been doing for a decade or more. So, while I understand the “emerging” moniker, I would say nothing is further from the truth. We are established managers with a great, proven model, more great opportunities to invest that money to do so, and a track record.